Regulators shut banks in Fla, Ga; 2011 total is 67

WASHINGTON 
Regulators on Friday closed one bank each in Florida and Georgia, lifting to 67 the number of U.S. bank failures this year.

The pace of closures has eased in 2011 as the economy has slowly improved and banks work their way through the bad debt accumulated in the Great Recession. By this time last year, regulators had shuttered 118 banks.

The Federal Deposit Insurance Corp. seized Lydian Private Bank, based in Palm Beach, Fla., with $1.7 billion in assets and $1.24 billion in deposits, and First Southern National Bank in Statesboro, Ga., with $164.6 million in assets and $159.7 million in deposits. Miami-based Sabadell United Bank agreed to assume the assets and deposits of Lydian Private Bank. Heritage Bank of the South, based in Albany, Ga., is assuming the assets and deposits of First Southern National Bank.

In addition, the FDIC and Sabadell United Bank agreed to share losses on $907.1 million of Lydian Private Bank's loans and other assets. The agency and Heritage Bank of the South are sharing losses on $115.7 million of First Southern National Bank's assets.

The failure of Lydian Private Bank is expected to cost the deposit insurance fund $293.2 million. That of First Southern National Bank is expected to cost $39.6 million.

Florida and Georgia have been among the hardest-hit states for bank failures.

Twenty-nine banks were shuttered in Florida last year. The shutdown of Lydian Private Bank brought to 10 the number of bank failures in the state this year. Regulators closed 16 banks in Georgia last year. First Southern National Bank is the 17th Georgia lender shut down this year.

California and Illinois also have seen large numbers of bank failures.

In all of 2010, regulators seized 157 banks, the most in any year since the savings-and-loan crisis two decades ago. Those failures cost around $21 billion. The FDIC has said 2010 likely marked the peak for bank failures from the Great Recession.

In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, a higher price tag than in 2010 because the banks involved were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.

From 2008 through 2010, bank failures cost the fund $76.8 billion. The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC's deficit narrowed in the first quarter of this year; it stood at about $1 billion as of March 31.

Depositors' money - insured up to $250,000 per account - is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July 2010.